Bank of Cyprus to issue EUR 645 mln capital securities

Bank of Cyprus Board has decided to proceed with the issue of convertible capital securities up to EUR 645 mln in an effort to further strengthen its capital. According to the Group’s audited financial statements as at 31 December 2008, the Capital Adequacy ratio (per Basel II requirements) stood at 11.2% and Tier 1 ratio at 7.2%. The core tier 1 ratio stood at 6.5%.
The proposed issue will further strengthen the Group’s tier 1 capital. Specifically, the Group’s tier 1 ratio as at 31 December 2009 is expected to increase to 10% from 7.2% at 31 December 2008, based on the Group’s strategic plan and taking into consideration the proposed amendments to the European Directive regarding the amount of hybrid capital which can be considered as tier 1 capital (35% of total tier 1 capital).
The Convertible Capital Securities will be issued at par in values of EUR1 and multiples thereof and will be offered via a priority right to all registered shareholders in the ratio of EUR 11 Convertible Capital Securities for every 10 shares held as at Record Date.
Shareholders may subscribe to the Convertible Capital Securities (based on the priority rights that will be allotted to them) either by paying the consideration in cash or by exchanging existing Convertible Bonds 2013/2018 of an equal nominal value.
The Convertible Capital Securities will bear a fixed annual interest rate of 5.5% for the first five years i.e. until 30 June 2014. In the event that the Convertible Capital Securities are not redeemed on 30 June 2014, the interest rate will be floating and will be equal to the 6-month Euribor in force at the beginning of each interest period plus 3.0%.
The Convertible Capital Securities may, at the option of the holder, be converted into ordinary shares during any Conversion Period. The first Conversion Period is 15-30 September 2010 and the Last Conversion Period is 15-31 March 2014. The Conversion Price has been set at €5.50 per ordinary share of nominal value EUR 1,00.